Split straining relations for subsidiary group

UGA Real Estate Foundation

ST. SIMONS ISLAND - The University of Georgia Foundation on Thursday turned back a move for independence by trustees of a subsidiary corporation, the UGA Real Estate Foundation.

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But even some UGA Foundation trustees who voted against beginning a severance process said the two groups should eventually separate.

''I'm concerned about the conflict which appears to be brewing in the relations the Real Estate Foundation has with the Board of Regents, and this foundation has with the Board of Regents,'' said Dudley Moore, a board member of the UGA Real Estate Foundation and a former chairman of the UGA Foundation.

Moore said the ''state of turmoil'' is making it hard for the real estate foundation to perform its mission.

''At this point we have a better shot at dealing with the Board of Regents than this foundation,'' he said.

Moore asked the foundation trustees to delay approving a new set of bylaws for the real estate foundation. The parent foundation, a private corporation that raises and invests funds for the benefit of UGA, went ahead with the new rules, which give the parent corporation more control over the real estate foundation.

''I think y'all ought to be independent, but I don't think this is the time,''said Peter Amann, chairman of the UGA Foundation's investment committee.

The real estate foundation was formed by the UGA Foundation as a vehicle to finance construction projects, buy and sell real estate and perform similar transactions on behalf of UGA. It has built or bought more than $200 million in structures, including an apartment complex, new UGA residence halls and the just-opened Complex Carbohydrate Research Center.

The new and purchased buildings are leased on a year-to-year basis to the University System Board of Regents, which oversees the state's 34 public colleges and universities. The stated goal of the lease arrangements is to cover debt payments until the loans are paid off, and to build up a pool of money in order to finance more projects. Buildings are to be turned over to state ownership once the debts are retired.

The debt-financed projects include one, the Gainesville College campus in Watkinsville, which was done at the request of the regents rather than UGA officials. The debt is backed with a $75 million line of credit from the UGA Foundation.

Stiles Kellet, a member of both foundations' boards, said real estate foundation Executive Director Jo Ann Chitty has already begun looking into the extra cost of going independent.